Lafarge to double capacity after launching US$25m expansion project

Published: 11 March 2020

Lafarge has budgeted US$25 million for its expansion project which will double capacity by year-end 2022. The expansion plan kicked off this morning at a ground-breaking ceremony for a Dry Mortar Mix (DMX) which will be set up at a cost of US$2.2 million.

Construction and commissioning of the plant will be done in six months. Stanbic Bank are the financiers of the project through a US$28.5 million loan but because of the current challenges in accessing foreign currency, letters of credit will be issued through the Reserve Bank of Zimbabwe.

CEO Precious Nyika said the main aim was to expand the product base and to increase market share. Speaking at the ground breaking ceremony at Manresa this morning, Finance and Economic Development Minister Mthuli Ncube said that Government had demonstrated its commitment to the Lafarge expansion project by granting it National Project Status.

The NPS was given after Lafarge Regional Head Middle East and Africa, Miljan Gotovic made a courtesy visit to President Mnangagwa. The expansion will also increase cement and agricultural lime capacity.

The project will be done in three phases to the tune of US$25m by the year-end 2022. US$2.2m will be needed for the first phase of a Dry Mortar Mix (DMX) plant, which will increase capacity by 614%. Target is to install a full manufacturing plant from raw material preparation to mixing, packing palletizing and shrink wrapping. This is aimed at achieving import substitution through matched quality, as well as upskilling staff through improved technologies and to have a positive impact downstream through more retail franchises.

The automated system to be used in the DMX plant is to be sourced from Turkey and will see the product range grow to include tile fixing compounds, tile adhesives, tile grout, bonding liquid and cement based paint among other products.

The whole project is going to double production to 800 000 tonnes per annum as the current installed capacity is currently at 400 000 tonnes per annum. Although this lags behind some of the country's top cement producers such as PPC, which has an installed capacity of 1.7 million tonnes per year, the investment is noble and will definitely be a game changer for the company going forward.

In an interview with FinX, Nyika said the company is still exploring for more lime deposits especially in Mashonaland West as was said by her predecessor. This will be part of their growth strategy as the company is also going to expand their agricultural lime plant in the last phase of the $25m expansion project.

The company also hopes to remain profitable after it swung to profitability in the first six months of 2019 as it recorded Z$2.9m profit from a loss position of Z$1.8m 2018. This will be helped by the fact that the company will not pay taxes and duty for capital requirements for the project as well as some temporary imports meant for the project. - finx